On 26 February 2025, Hong Kong’s Financial Secretary, Paul Chan Mo-po announced the 2025-2026 Hong Kong Budget. He explains that the city’s economy is expected to grow 2-3% in real terms for 2025.
We cover essential highlights for businesses and HR leaders to take note of:
Positioning AI as a “Core Industry” in Hong Kong
The government is set to keep aside HK$1 billion for the establishment of the Hong Kong AI Research and Development Institute.
Paul Chan is committed to establishing AI as a “core industry” and transforming Hong Kong into an “international hub for exchange and collaboration” within the sector. He emphasised that AI is reshaping the global economic landscape, with its influence extending across all industries through the concept of “AI+”.
He outlines plans to implement measures to foster cutting-edge research, promote real-world applications, and enable traditional industries to upgrade and transform.
Tax Measures to Support Residents and Certain Industries
For the 2024-25 fiscal year, salaries tax and tax under personal assessment will be reduced by 100%, with a maximum reduction of HK$1,500 per taxpayer. This initiative will provide relief to 2.14 million taxpayers.
Additionally, for the 2025-26 assessment year, profits tax will be reduced by 100%, capped at HK$1,500 per business. This measure is expected to benefit 165,400 businesses.
Increased Funding to Attract Top-Talent Students
The budget revealed that an additional HK$1.5 billion will be allocated to the research matching grant scheme, aiming to incentivise more organisations to back research initiatives in Hong Kong.
Additionally, the quota for the Hong Kong PhD Fellowship Scheme will be expanded to 400 spots annually.
HK$1.5 Billion Boost for SMEs
The government will allocate HK$1.5 billion to enhance existing funds aimed at supporting local businesses. This includes the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund) as well as the Export Marketing and Trade and Industrial Organisation Support Fund.
Consultation on MPF Portability to Begin
The Financial Secretary announced that the Mandatory Provident Fund Schemes Authority will conduct a public consultation this year regarding full MPF portability and will present its recommendations to the government.
He expressed optimism that the full portability agreement could be implemented following the rollout of the eMPF platform.
Drawing More Enterprises to the City
It was announced that the Office for Attracting Strategic Enterprises (OASES) will unveil a new group of over 10 strategic enterprises next month. Combined with those previously announced, these companies are expected to invest approximately HK$50 billion in Hong Kong and generate more than 20,000 jobs in the coming years.
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For further information on the 2025-26 Hong Kong Budget, please head over to the official government website: https://www.budget.gov.hk/2025/eng/index.html
